How Are Successful Medical Malpractice Plaintiff’s Laywers Paid?

The aim of any medical malpractice claim is to secure compensation for the person who suffered harm or loss at the hands of the negligent party. Filing a claim to obtain compensation is the legal right of any unjustly injured party. The wrongdoing is redressed by financial damages, awarded to the plaintiff by the court and to be paid by the defendant or their liability insurance company.

Types of Damages in Medical Malpractice Cases

The medical malpractice damages a plaintiff could be awarded are classified into two categories – economic, which compensate hard, quantifiable financial loss incurred as result of the injury, such as medical expenses, loss of wages and loss of earning potential, and noneconomic, which compensate the more abstract, non-financial losses such as pain, suffering, disability, disfigurement and loss of companionship. A third category, punitive damages, are imposed on the defendant but are not awarded to the plaintiff. They are meant to dissuade the defendant from engaging in negligent conduct after the case concludes.

As medical malpractice cases are a type of personal injury suit, most damages awarded will not be taxed by the state or federal government. The plaintiff may elect to be paid in a lump sum or in installments. There is also the matter of future damages, such as “costs for future medical expenses, costs of care or custody, and other outlays related to the claim – physical and mental condition; economic losses such as wages or other income reduced or precluded by the injury; and future noneconomic losses including pain and suffering, loss of consortium, and loss of normal bodily function,” [1] which also amount to a fixed sum but will be awarded in periodic payments.

Advantages of Settling a Medical Malpractice Case

A plaintiff will either be awarded damages as the end result of a formal trial or as a settlement after informal arbitration. Out-of-court settlements are extremely common and have several advantages. If anything, trial may be likened to the last resort for securing a claimant’s rightful compensation. Court trials and any subsequent appeals could last for months, sometimes stretching on for years. Although settlements are legally binding, they are not subject to the same legal formality as trials. They are far less costly and involve less lawyer labor. Therefore, less legal fees may be subtracted from the final settlement award.

The amount of damages that a plaintiff receives may be reduced by their share of fault for the injury if any. Almost every state has adopted what is known as a ‘comparative fault doctrine‘ which allows the jury to evaluate the claim and determine where blame should be allocated. This covers cases where the patient may have contributed to or exacerbated their own injury. Certain states employ a ‘bar rule,’ which prevents plaintiffs from recovering damages if their share of fault exceeds 50% or 51%, depending on the state.

A minority of states allow plaintiffs to recover damages even if they were as much as 99% at fault for their injury (in theory). If the court determines that a given plaintiff is eligible for recovery (in accordance with the law of that state), their share of fault does not exceed the maximum allowance, but their damages will be reduced by a percent equal to their share of the blame. For example, a doctor neglects to consult a patient’s records and prescribes a medication they are allergic to. They advise the patient not to consume alcohol while on the medication. The patient disobeys the doctor’s orders and drinks alcohol while on the medication. They become ill from the allergic reaction. The patient sues the doctor for malpractice. The court awards $100,000 in damages to the plaintiff. However, the jury finds while the physician was 75% at fault for the plaintiff’s injuries, the plaintiff was 25% at fault for consuming alcohol and exacerbating the negative effects. For this reason, the plaintiff may only collect $75,000 or 75% of the jury award.

Because most plaintiffs lack the capital to commence litigation, their lawyers accept their cases with the understanding that they will not be paid for their legal services unless the case is won. This is called a contingency fee because the lawyer’s payment is conditional and depends on the outcome of the case. This encourages attorneys to provide the best representation possible, as they have a measurable financial stake in the case. While fee structures can vary between lawyers, the contingency fee structure is very common in personal injury/medical malpractice cases.

Those who are injured didn’t anticipate their misfortune and don’t heavy ready funds for litigation. Without contingency fees, personal injury and medical malpractice litigation would be almost impossible, or at least extremely difficult. It has been said that contingency fee arrangements “open the courthouse door” for those in a lower income bracket who cannot readily fund a case. At a time when medical malpractice plaintiffs are recovering from injury, dealing with their hospitals and insurance companies – it is helpful not to be faced with towering legal fees on top of their other trials. While they have their advantages and drawbacks, contingency do offer a great deal of flexibility to both client and attorney. The attorney is very transparent with the plaintiff regarding any changes to a contingency fee agreement, which may change depending on where the case seems to be heading. The attorney does take on a substantial financial risk, so the client can be assured that they would not have taken on their case if they did not wholeheartedly believe in its merits.

Depending on the jurisdiction, the contingency fee may change in accordance with the amount of damages awarded. This is because of something called a “sliding scale.” Some states cap contingency fees at a flat rate, such as 33.3% of total damages. Others employ the sliding scale, in which the contingency percentage decreases as the damage sum increases. For example, 40% over the first $50,000 of recovered damages, 33.33% over the next $50,000, 25% over the next $500,000. Generally speaking, contingency fees fall between 33-40% of the total settlement or compensation. At their highest they may be as much as 50%; at their lowest, they could be in the neighborhood of 15%.

Contingency fee arrangements are better suited to claims that tread in well-charted legal waters. If a claim is exploratory with regard to what it can achieve, pushes the boundary and has little precedent case law, the attorney may be unwilling to take the case or will ask a higher contingency fee. Attorneys not only want to have towing confidence in the merits of a case, they generally want to take on cases they already have a good deal of experience in.

A common question plaintiffs have surrounding contingency fees is whether the costs of litigation come out of the lawyer’s portion of the damages, assuming the case is won. They do not. If the costs of litigation, discovery etc were covered by the lawyer’s percentage of the damage award, a conflict of interests would arise. They would be discouraged from pouring resources into thorough investigation and paying for the best experts, for fear of drastically reducing their own share of compensation for litigating the case. Therefore, the costs of litigation are not funded by the contingency fee.

Clients and attorney should have forthright communication about the fee arrangement, to avoid any confusion moving forward. Plaintiffs should be aware that if they lose the case, even though they will not owe money to their legal representative unless otherwise specified, the court may impose the defendant’s legal expenses on the plaintiff – a sort of “loser pays” arrangement. This is far from a guarantee, however, it is a possibility. Managing client expectations is a crucial aspect of lawyering. For contingency fee arrangements, they should clearly articulate that the client will not receive the (theoretical) gross damage sum in its entirety because the lawyer’s contingent fee will be subtracted from it.

For commercial litigation, hourly fees are the norm. Flat fees are customary for routine legal transactions like house closings. “Hybrid” fee arrangements contain elements of hourly fees, flat fees, and contingency fees. Hybrid fees have their discrete set of advantages and drawbacks. The logic upholding hybrid fees is simple – it reduces a portion of the enormous financial risk a lawyer assumes when they accept a plaintiff’s contingency case. By implementing both hourly and contingency fees, the plaintiff and attorney then mutually share the financial burden of litigation, without it falling exclusively on the lawyer’s shoulders. However, the collective sum of the contingency fees and hourly pay cannot exceed the fixed amount designated on the sliding scale, in certain states. An attorney may propose a hybrid fee which begins as an hourly fee and may convert to a contingent fee if the casework exceeds a certain number of hours. Naturally, in hybrid fee situations, the hourly fee is significantly lower than it would be in a normal hourly fee format because the lawyer compensates their risk with the addition of a contingent fee.

[1] Plant, Marcus L. “Periodic Payment of Damages for Personal Injury.” Law.lsu.edu. Louisiana Law Review, May 1984. Web. May 2017. <http://digitalcommons.law.lsu.edu/cgi/viewcontent.cgi?article=4836&context=lalrev/>.